EX-99.1 2 a5098619ex991.txt CHILDREN'S PLACE EXHIBIT 99.1 Exhibit 99.1 The Children's Place Retail Stores, Inc. Reports Fiscal Fourth Quarter and 2005 Financial Results; GAAP Earnings Per Share Increased 85% to $1.57 for the Fourth Quarter and 46% to $2.27 for Fiscal 2005, In-Line with Guidance SECAUCUS, N.J.--(BUSINESS WIRE)--March 9, 2006--The Children's Place Retail Stores, Inc. (Nasdaq: PLCE) today reported financial results for the fourth quarter and fiscal year ended January 28, 2006. Fourth Quarter -- Consolidated net sales for the fourth quarter increased 17% to $539.7 million, compared to $462.1 million last year. Fourth quarter sales were comprised of $355.1 million from The Children's Place, a 19% increase over last year, and $184.6 million in sales from Disney Store, compared to $163.4 million for Disney Store last year. Fiscal 2005 fourth quarter sales results included 13 weeks of sales at Disney Store versus 10 weeks last year. -- Comparable store sales for The Children's Place increased 11% in the quarter, on top of a 17% increase last year. Fourth quarter comparable store sales exclude the Disney Store brand, which did not enter the comparable store sales base until February 2006, consistent with the Company's comparable store sales definition. -- Net income increased 91% to $45.7 million versus $23.9 million including extraordinary gain last year. -- Diluted earnings per share increased 85% for the quarter to $1.57, compared to diluted earnings per share including extraordinary gain of $0.85 for the fourth quarter last year. -- The Company opened 16 Children's Place stores and two Disney Stores during the fourth quarter. In addition, the Company closed six Disney Stores. The above GAAP net income and earnings per share results include: -- a $2.1 million, or $0.07 per share, charge related to the accelerated vesting of certain stock options; and -- a $0.3 million, or $0.01 per share, charge reflecting the Company's announcement last week to retrospectively apply FSP FAS No. 13-1, the expensing of rent during construction. Excluding the above items, fourth quarter earnings per share would have been $1.65, in-line with previous guidance. Fiscal Year 2005 -- Net sales for the fiscal year increased 44% to $1.669 billion, from $1.158 billion for 2004. Fiscal 2005 sales were comprised of $1.171 billion from The Children's Place, an 18% increase over last year, and $497.7 million in sales from the Company's Disney Store business. -- Comparable store sales for The Children's Place increased 9% for the year, compared to a 16% increase last year. -- Net income including extraordinary gain increased 53% to $65.6 million versus $42.8 million including extraordinary gain last year. -- Diluted earnings per share including extraordinary gain increased 46% to $2.27, compared to diluted earnings per share including extraordinary gain of $1.55 in fiscal 2004. -- The Company opened 55 Children's Place stores and 18 Disney Stores in fiscal 2005. In addition, the Company closed three Children's Place stores and seven Disney Stores. For fiscal 2005, the impact of FSP FAS No. 13-1 was approximately $2.4 million, or $0.05 per share. Excluding this item and the accelerated vesting of stock options, fiscal 2005 earnings per share including extraordinary gain would have been $2.39. "Fiscal 2005 was another great year for our Company. The Children's Place brand continued to gain market share and the growth and leverage achieved in the fourth quarter was a testament to our scaleable systems infrastructure, strong team and management depth," said Ezra Dabah, Chairman and Chief Executive Officer of The Children's Place. "At Disney Store, while the fourth quarter proved challenging, we have made progress in positioning the business for success and we look to 2006 with excitement. Disney has a great line-up of new content coming up this year, and we have aligned our merchandise strategies to capitalize on these events in a big way. We continue to believe that The Children's Place and Disney Store can grow up to 1,800 stores across North America, leaving us with 700 stores still to open. I am confident that both brands have substantial opportunity to deliver significant, profitable growth for many years to come." The Children's Place will host a webcast of its fourth quarter conference call today at 9:00 a.m., Eastern Time. Interested parties are invited to listen to the call at the Company's web site, www.childrensplace.com. An archive of the webcast will be available on the site through Thursday, March 16, 2006. The Children's Place Retail Stores, Inc., is a leading specialty retailer of children's merchandise. The Company designs, contracts to manufacture and sells high-quality, value-priced merchandise under the proprietary "The Children's Place" and licensed "Disney Store" brand names. As of February 25, 2006, the Company owned and operated 802 The Children's Place stores and 316 Disney Stores in North America and its online store, www.childrensplace.com. This press release and above referenced call may contain certain forward-looking statements regarding future circumstances. These forward-looking statements are based upon the Company's current expectations and assumptions and are subject to various risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements including, in particular, the risks and uncertainties described in the Company's filings with the Securities and Exchange Commission. Actual results, events, and performance may differ. Readers or listeners (on the call) are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to release publicly any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The inclusion of any statement in this release does not constitute an admission by The Children's Place or any other person that the events or circumstances described in such statement are material. (Tables Follow) THE CHILDREN'S PLACE RETAIL STORES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) 13 Weeks Ended: 52 Weeks Ended: January 28, January 29, January 28, January 29, 2006 2005 2006 2005 ----------- ----------- ----------- ----------- Net sales $539,718 $462,108 $1,668,736 $1,157,548 Cost of sales 304,252 281,659 1,007,496 705,681 ----------- ----------- ----------- ----------- Gross profit 235,466 180,449 661,240 451,867 Selling, general and administrative expenses 144,641 130,035 505,684 333,718 Depreciation and amortization 15,260 12,646 52,886 49,049 ----------- ----------- ----------- ----------- Operating income 75,565 37,768 102,670 69,100 Interest (income) expense, net (272) 177 (563) 22 ----------- ----------- ----------- ----------- Income before income taxes and extraordinary gain 75,837 37,591 103,233 69,078 Provision for income taxes 30,143 13,983 39,322 26,595 Income before extraordinary gain 45,694 23,608 63,911 42,483 Extraordinary gain, net of taxes 0 273 1,664 273 ----------- ----------- ----------- ----------- Net income $45,694 $23,881 $65,575 $42,756 =========== =========== =========== =========== Basic net income per common share before extraordinary gain $1.64 $0.87 $2.31 $1.58 Extraordinary gain, net of taxes 0.00 0.01 0.06 0.01 ----------- ----------- ----------- ----------- Basic net income per common share $1.64 $0.88 $2.37 $1.59 =========== =========== =========== =========== Basic weighted average common shares outstanding 27,899 27,076 27,676 26,919 Diluted net income per common share before extraordinary gain $1.57 $0.84 $2.21 $1.54 Extraordinary gain, net of taxes 0.00 0.01 0.06 0.01 ----------- ----------- ----------- ----------- Diluted net income per common share $1.57 $0.85 $2.27 $1.55 =========== =========== =========== =========== Diluted weighted average common shares and common share equivalents outstanding 29,127 28,106 28,877 27,633 Note: Periods presented include the retrospective application of FAS FSP 13-1. THE CHILDREN'S PLACE RETAIL STORES, INC. RETROSPECTIVE APPLICATION OF FSP FAS 13-1 (In thousands, except per share amounts) (Unaudited) 13 Weeks Ended January 29, 2005 ------------------------------- Reported Adjustments Adjusted -------- ----------- -------- Net sales $462,108 $ -- $462,108 Cost of sales 281,659 -- 281,659 -------- ----------- -------- Gross profit 180,449 -- 180,449 Selling, general and administrative expenses 129,146 889 130,035 Depreciation and amortization 13,383 (737) 12,646 -------- ----------- -------- Operating income 37,920 (152) 37,768 Interest expense (income), net 177 -- 177 -------- ----------- -------- Income before income taxes and extraordinary gain 37,743 (152) 37,591 Provision for income taxes 14,041 (58) 13,983 -------- ----------- -------- Income before extraordinary gain 23,702 (94) 23,608 Extraordinary gain (net of taxes) 273 -- 273 -------- ----------- -------- Net income $23,975 $(94) $23,881 ======== =========== ======== Basic income per share $0.89 $(0.01) $0.88 Basic weighted average number of shares outstanding 27,076 27,076 27,076 Diluted income per share $0.85 $0.00 $0.85 Diluted weighted average number of shares outstanding 28,106 28,106 28,106 52 Weeks Ended January 29, 2005 ------------------------------- Reported Adjustments Adjusted -------- ----------- -------- Net sales $1,157,548 $ -- $1,157,548 Cost of sales 705,681 -- 705,681 -------- ----------- -------- Gross profit 451,867 -- 451,867 Selling, general and administrative expenses 330,080 3,638 333,718 Depreciation and amortization 51,835 (2,786) 49,049 -------- ----------- -------- Operating income 69,952 (852) 69,100 Interest expense (income), net 22 -- 22 -------- ----------- -------- Income before income taxes and extraordinary gain 69,930 (852) 69,078 Provision for income taxes 26,923 (328) 26,595 -------- ----------- -------- Income before extraordinary gain 43,007 (524) 42,483 Extraordinary gain (net of taxes) 273 -- 273 -------- ----------- -------- Net income $43,280 $(524) $42,756 ======== =========== ======== Basic income per share $1.61 $(0.02) $1.59 Basic weighted average number of shares outstanding 26,919 26,919 26,919 Diluted income per share $1.57 $(0.02) $1.55 Diluted weighted average number of shares outstanding 27,633 27,633 27,633 THE CHILDREN'S PLACE RETAIL STORES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) January 28, 2006 January 29, 2005 ---------------- ---------------- Current assets: Cash and investments $173,323 $165,196 Accounts receivable 28,971 23,987 Inventories 214,702 161,969 Other current assets 43,875 41,007 ---------------- ---------------- Total current assets 460,871 392,159 Property and equipment, net 246,516 204,443 Other assets, net 36,865 19,558 ---------------- ---------------- Total assets $744,252 $616,160 ================ ================ Current liabilities: Revolving credit facility $ 0 $37,268 Accounts payable 81,800 78,106 Accrued expenses and other current liabilities 131,204 99,575 ---------------- ---------------- Total current liabilities 213,004 214,949 Other liabilities 138,390 100,305 ---------------- ---------------- Total liabilities 351,394 315,254 Stockholders' equity 392,858 300,906 ---------------- ---------------- Total liabilities and stockholders' equity $744,252 $616,160 ================ ================ Note: Periods presented include the retrospective application of FAS FSP 13-1. THE CHILDREN'S PLACE RETAIL STORES, INC. SEGMENT INFORMATION (In millions) (Unaudited) Thirteen Weeks Ended January 28, 2006 ------------------------------------------- The Children's Disney Shared Total Place Store Services (1) Company ---------- -------- ------------ ------- Net sales $ 355.1 $ 184.6 $ - $539.7 Segment operating profit (loss)(1) 76.1 19.0 (19.5) 75.6 Operating profit as a percent of net sales 21.4% 10.3% N/A 14.0 % Fifty-Two Weeks Ended January 28, 2006 ------------------------------------------- The Children's Disney Shared Total Place Store Services(1) Company ---------- ------- ----------- --------- Net sales $ 1,171.0 $497.7 $ - $1,668.7 Segment operating profit (loss)(1) 170.0 (3.4) (63.9) 102.7 Operating profit (loss) as a percent of net sales 14.5% (0.7)% N/A 6.2% (1) The $2.1 million expense for the acceleration of vesting of certain stock options is recorded in Shared Services. CONTACT: The Children's Place Hiten Patel, 201-902-2177 or Investor Relations: Heather Anthony, 201-558-2865